CFCL Investment regulation – Germany
Reference
Regulatory structure
Please refer to the Investment regulation – Germany for the complete information about the Regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 2 October 2020. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding Restrictions – CSD Market – Germany
There are generally no holding restrictions for foreign investors in the German market.
Restrictions on clients
CFCL Clients domiciled in Germany are not allowed to hold The German investment funds on the Register market through CFCL. It is the responsibility of the Client to ensure compliance with the restriction.
Certain funds may impose other specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering transactions.
Restrictions on settlement
There is no general restriction on settlement for German investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering transactions.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.
Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Category 1
Markets where disclosure by Clearstream as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Category 2
Markets where disclosure by Clearstream as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Category 3
Markets where there is no obligation for Clearstream as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – CSD Market – Germany
Disclosure Category 1
German laws implementing the Shareholders Rights Directive II (SRD II Law) provide for the right of issuers to identify their shareholders.
For registered securities, there is also a civil law obligation on the part of CBL to disclose the identity of the shareholder to the issuing company.
Consent
Clients holding German registered shares consent and are hereby deemed to consent to disclosure and to the appointment of the requestor as their attorney-in fact, under power of attorney to collect from CBL such information as is required to be disclosed. Clients who do not want to grant such authority to CBL should refrain from holding such shares in their account with CBL.
Disclosure requirements
Pursuant to the SRD II Law, issuers are entitled to request intermediaries, including CSDs, to promptly provide relevant information to facilitate the identification of their shareholders, including their addresses. The information is to be distributed through the whole custody chain. CEU is obliged to forward respective requests to CBL and to disclose information received from CBL to the requesting issuer.
With regard to German registered shares accepted in CBL, clients should be aware that the German company issuing the shares, under civil law, may require CBL, on request and/or on a regular basis, to disclose to that company information relating to the identity of CBL clients holding any of the company's registered shares in CBL and the quantity of shares held.
Furthermore, should the above reporting reveal that a client's holding in the registered shares of some German companies whose shares are accepted in CBL exceeds a certain amount of shares, the company may require CBL to request the client to disclose the legal status and location of the final beneficiaries of that client's holding.
Background and legal basis
In Germany, companies may issue shares in bearer or registered form.
According to Section 67d(1) German Stock Corporation Act (AktG) implementing SRD II, issuers can request intermediaries, including CSDs, to promptly provide relevant information to facilitate the identification of their shareholders.
In the case of bearer shares, there is no obligation on custodians to disclose client information, although shareholders themselves may have the obligation to disclose, for example, when crossing reporting thresholds.
In the case of registered shares, the Articles of Association of a German company issuing such shares may also require CBL, upon request and/or on a regular basis, to disclose to that company information relating to the identity of its clients. CBL typically registers such holdings in its own name and is consequently bound by the rules of the issuing company.
Corporations that have issued registered shares may insist, in the Articles of Association, that company approval (from the board of managing directors or from the supervisory board) or shareholder approval (at the AGM or at an EGM) is required before shares can be transferred.
Please refer to Disclosure Requirements - Germany for more complete information on disclosure requirements for Germany.
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 2 October 2020. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.